However, Mirziyoyev will keep his options open by improving ties with the West and maintaining tight relations with China.

We maintain our short-term political risk score of 66.3 out of 100, given improving ties are yet to significantly change the Uzbek political risk outlook. However, we expect the score to rise on the back of greater economic prospects and improved security.

President Shavkat Mirziyoyev's efforts of diplomacy will mark a shift in relations with Russia. Uzbekistan under former president Islam Karimov (1991-2016) had been politically isolated, with Karimov resisting Russian overtures for closer engagement. Under Karimov, Uzbekistan's relationship with Russia was mixed. Uzbekistan left the Russia-led Collective Security Treaty Organisation (CSTO) in 2012 and resisted reported offers from Russia to join the Eurasian Economic Union (EAEU). It did however join the Commonwealth of Independent States Free Trade Area, which includes Russia, and it was reported Russia forgave over USD850mn in debts owed to by Uzbekistan in 2014, although the exact details of the deal remain unclear. Nevertheless, since taking power in December 2016, President Mirziyoyev has pushed to improve Uzbekistan's international ties ( see 'Diplomacy And Financial Markets Offer Further Hope', 9 May 2018).

The improved relations will yield greater economic activity between the two countries and improved security cooperation. In October 2018, President Mirziyoyev met with Russian President Vladimir Putin, in what was seen as an effort to court the Russian president's favour. The meeting reportedly secured over USD20.0bn in deals, including an agreement for the construction of a Russian-backed nuclear plant in Uzbekistan, reported to cost USD11.0bn. The two countries agreed to de-dollarise trade, and an economic cooperation agreement from 2019 to 2024 was planned, aiming to further improve economic ties. Key for Mirziyoyev was easing the access of Uzbek workers to the Russian economy and improving their rights. Meetings between the two countries have been frequent since Mirziyoyev's visit to Moscow in April 2017. Talks have also led to improved security ties between the two countries. Examples include: a joint approach to diplomacy with Afghanistan, the mutual use of airspace by military jets, and the possibility of cooperation on weapon manufacturing.

There is the potential for the relationship to grow closer. With Mirzyoyev keen to position himself as a leading voice for the Central Asia region, Uzbekistan's absence from the CSTO and EAEU may limit his influence. Russia is keen to increase its influence within the region, aware of the growing influence of China and the presence of NATO within the region. The agreed Russian investment will likely come with pressure for Uzbekistan to consider joining these intergovernmental alliances. The nuclear power plant is equivalent to over 65.0% of Uzbekistan's gross external debt as of Q218. As such, Uzbekistan will be increasingly indebted to Russia and this too will increase Russia's leverage over the country.

However, Mirziyoyev will likely opt to resist becoming too close to Russia, keeping his options open with China and the West. In early October, Mirziyoyev made his first visit to a European Union country, meeting French President Emmanuel Macron. During the visit Mirziyoyev secured EUR5.0bn in investment projects, which comes in addition to investment by the European Investment Bank (EIB). In May, Mirziyoyev met with US President Donald Trump, with the two presidents agreeing to further cooperation between the nations. American businesses had already committed to over USD4.0bn in investments before the meeting. An even larger challenge to Russia's influence in Uzbekistan is China. Chinese firms have been investing in Uzbekistan as part of its 'Belt And Road' Initiative, and over USD20.0bn in agreements were signed between the two countries in 2017. Chinese Premier Li Keqiang called for greater cooperation between the two countries at the Shanghai Cooperation Organisation summit in October. As such, Mirziyoyev will continue to play a balancing act between global superpowers, enabling Uzbekistan to see greater investment and improved trade links over the coming years.